Interaction Effects of Internet and ODA on Economic Growth

Based on a panel of 135 countries from 1994 to 2015, this paper shows the interaction of ODA amounts and the internet user shares in the ODA recipient countries has a positive and statistically significant coefficient for both GDP per capita and its growth rates. The main results are robust even when I control for region-specific time trends or use instrumental variables. The results also do not change when I control for the interaction term between mobile phone user shares and ODA amounts, between landline phone user shares and ODA amounts, or between the corruption perceptions index and ODA amounts. These results suggest that the internet has a unique impact on the effectiveness of ODA, distinct from the impact of ICT or institution in general.